The Wolves of Wall Street are everywhere

Oppenheimer has the
highest percentage of advisers who have been disciplined for
misconduct.The Market for Financial
Adviser Misconduct

There are more wolves on Wall Street than you might realize.

In a
paper published February 26, academics Mark Egan, Gregor
Matvos, and Amit Seru looked at conduct records for financial
advisers.

They point out that while a number of highly publicized
scandals (think: "The Wolf of Wall
Street") have rocked the industry, the full scale of
misconduct has not been "systematically documented."

Their study, they argue, is "the first large-scale study
that documents the economy-wide extent of misconduct among
financial advisers and financial advisory firms."

The findings are pretty damning. Misconduct is surprisingly
common, and there are a number of repeat offenders out there
moving from firm to firm.

The academics crunched the data on 1.2 million current and
former advisers from 2005 to 2015, and found that 7.28% have been
disciplined for misconduct or fraud. That is equivalent to 87,000
people.

That statistic has broad significance. More than half of
all American households sought advice from a financial adviser in
2010, according to the study, and the 650,000 active advisers
help manage over $30 trillion in investable assets.

Academic
paper

Here are some key stats:

The most common cause of a misconduct disclosure is a
customer dispute that has been settled.

The three most common reasons for customer disputes are
unsuitable advice, misrepresentations and unauthorized activity.

In some counties in Florida and California, around 20% of
advisers have been disciplined.

Roughly one-third of the 7% disciplined are repeat
offenders.

Past offenders are as much as five times more likely to
engage in misconduct than the average adviser.

The median settlement payment paid to customers is $40,000.

Over half of financial advisers who engage in misconduct keep
their job into the following year.

And 44% of those who do lose their job after misconduct find
a new job within a year.

Morgan Stanley and Goldman Sachs have the lowest percentage
of advisers who have been disciplined for misconduct, while
Oppenheimer has the highest.